Case Study Example of the Outsourcing Policy in Thompson Medical

Thompson Medical

1. Figuring out what activities bring the most benefit to the company when outsourced is a critical decision for the company. According to TMS, the core activities are those who have intent to improve the customer value or the users interaction and these events also can score high profits. Example, the healthcare is keen on cost-effectiveness, and this has resulted in the management of the hospitals to develop businesslike approach instead of the traditional approach. Value and profit margins have evidently led to such approach being undertaken. The non-core activities are those which enable the company to carry out their daily routine without hiccups. Therefore, the non-core activities add little value and are not profit centered. Example, mature projects like those sold by TMS have emphasized on price erosion and the need to consider value/cost ratio that needs to be delivered in all the goods and services provided by the institution.

2. The critical attributes of outsourcing policy prepared by Hans Schmidt entailed developing all the individual components and assembling the units in-house. Thus, TMS emphasized the need to move from purchase of individual or mono-parts to higher level purchase (HLP). Furthermore, he noted the need to create long-term partnerships that benefit everyone especially those that involve financial stability. Example, the suppliers need to be depended especially when a critical business process or technology is on 3rd party hands, balance is vital. Outsourced parties need to have the capability to have proactive strategies to stop a problem before it becomes one especially if the issue is IT based. Additionally, it is paramount for the outsourcing firm to ensure it works in support of the parent business as it grown and the goals consistently change.

3. There are four identified risks associated with levels of outsourcing relationships. First, by the TMS giving up a technology cluster competency, there is a probability of reducing the innovative ideas in that process. Second, there is a high probability of losing the drive to recognize future possibilities of a competence cluster as there is a direct relation with Thomas future product portfolio. Third, by outsourcing, there is the probability of judging the competitiveness of its suppliers in the market to ensure they only select the best suppliers. Fourth, the supplier generated solutions have a potential to be inferior to those developed by TMS with the result not being as good as the best products in the market currently. I do agree with the identified risks of outsourcing, in the event the company outsources many of its noncore activities that are responsible for the daily functioning, the group overall core activities are affected. The intended profits and values are directly influenced by the noncore activities which are majorly assigned to the outsourcing firms.

4. The joint stair-steps that TMS needs to develop with its suppliers first involves conformance where all the suppliers are assembled and identified the significant roles they play to ensure they do not fail. The second step concentrates on the requirements of the relationship where all the logistics examples, deliveries, inventories, and schedules are all factored. The third is functionality where there is backward integration into the new manufacturing. The third steps concentrate on the total value added. Fourth step designing of the module, the focus of the design is ensuring the costs are kept at a bare minimum and new value benefits endorsed. The joint stair-steps to be developed by TMS is critical, and all the suppliers need to recommend it as it provides both the parent company and suppliers firm an opportunity to work seamlessly by ensuring all the deliverables met without significant hiccups.